Federal government gives New Jersey two more weeks to pay back $271M tunnel tab

TRENTON, N.J. — The U.S. Transportation Department has granted New Jersey an extension of just over two weeks to pay back the $271 million it owes for a scrapped rail tunnel to New York City.

The extension was granted in a letter dated Monday to lawyers for the law firm that New Jersey Transit hired to fight the debt. The Associated Press obtained the letter Tuesday. The firm, Patton Boggs, had requested the extension in response to a Nov. 24 letter demanding full repayment within 30 days.

Gov. Chris Christie killed the $8.7 billion tunnel project in October because of possible cost overruns. The Federal Transit Authority then demanded repayment of federal money already spent on the project.

Christie did not mention the extension at a bill signing in Wayne on Tuesday, but he did say he has yet to hear from U.S. Transportation Secretary Ray LaHood about an offer to reduce New Jersey’s debt. “They haven’t made an offer yet,” Christie said. “To this point, I have not gotten a call from Secretary LaHood, and I know he has my number.”

LaHood signed a letter on Dec. 14 confirming that $128 million would be credited to a congestion mitigation account after New Jersey repays the debt in full.

Sen. Frank Lautenberg, who helped secure federal funds for the project, had been negotiating with federal transit authorities to get the bill reduced. The law firm now has until Jan. 10 to submit a response.

Christie killed what was the most expensive public works project in the country, citing potential overruns that he said could add $2 billion to $5 billion or more to the price. The federal government and Port Authority of New York and New Jersey each contributed $3 billion to the project, while New Jersey’s share was $2.7 billion. The state and Port Authority were responsible for overruns.

Christie approved the hiring of Patton Boggs, a well-connected Washington law and lobbying firm at $485 per hour to fight the bill for the return of federal money already spent on engineering and construction of the tunnel. The governor called LaHood’s reimbursement offer “a good start.”

The tunnel under the Hudson River would have doubled rail capacity between New Jersey and New York at a time when train service between the states is at capacity and delays are frequent.

NJ Transit has asked the North Jersey Transportation Planning Authority for permission to spend $75 million of the money earmarked for the tunnel on 100 new multilevel rail cars.